Backing the termination of the Delhi Airport express line contract by Delhi Airport Metro Express Private Limited (DAEMPL), a subsidiary of Reliance Infrastructure as legal, Attorney General Mukul Rohatgi has recommended that the Delhi Metro Rail Corporation (DMRC) should immediately give termination payment to the operator which walked out of the project in 2013.
Rohtagi gave this view to Union urban development (UD) ministry recently after the latter sought his opinion following the dispute after DMRC said that it does not recognize DAEMPL's termination as the case is under arbitration. DAEMPL had terminated the contract citing DMRC’s “persistent” failure to cure defects in the civil structure.
As per the project contract, DMRC will have to shell out 80 % of the project's debt due as termination payment even if the contract is terminated on account of DAEMPL's default. This comes to about Rs 1820 crore with DAEMPL claiming that its total debt is to the tune of Rs 2274 crore.
DMRC has also disputed this figure arguing that the permissible debt limit of the concessionaire as approved by the government was Rs 1247 crore. If one goes by this figure, DMRC will have to shell out atleast Rs 900 crore to DAEMPL. Though the permissible debt limit of the concessionaire as approved by the government was just Rs 1247 crore, DMRC claims that DAEMPL ended up burrowing Rs 2274 crore from the market.
“In his opinion given to the UD ministry the AG has said that the termination payment gets triggered from the date of termination of the contract. He has also said that DMRC should immediately pay the amount to avoid heavy penal interest,” a source in the law ministry said.
For delaying termination payment, DMRC will have to pay interest which comes to about Rs 17 crore per month.
On the quantum of termination payment, the AG has said that it should be made according to the terms and condition of the concession agreement. “The AG has said that termination payment, debt and equity are clearly defined in the concession agreement. If the debt figures are under dispute, DMRC can get it verified through statutory auditors.”
Earlier, the UD ministry was also of the view that DMRC should be asked to pay immediately.